Blog

Month: February 2018

Sentiment Is Not a Strategy (Part I)

  • Sentiment
  • Charlie Bilello

Everyone is Bullish. Everyone is Bearish. Two phrases often heard in markets, and often accompanied by following quote, courtesy of Warren Buffett: Be fearful when others are greedy and greedy when others are fearful. Great saying, but what exactly does it mean? How do you know when “others are greedy or fearful”? And how do […]

  • Posted in Sentiment
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Earnings, Stock Prices, and the Voting Machine

“The stock market is a voting machine rather than a weighing machine. It responds to factual data not directly, but only as they affect the decisions of buyers and sellers.”- Graham and Dodd, Security Analysis Earnings drive stock prices – so says investing lore. As earnings rise or fall, stock prices move higher or lower by […]

  • Posted in Equities, Markets
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Still Easy After All These Years

  • Fed
  • Charlie Bilello

Let’s pretend you were living in a bunker since February 2009 with no access to the outside world. You come out of the bunker in February 2018 and are presented with the following facts: 1) The U.S. economic expansion is now eight and a half years long, the 3rd longest in history at 102 months […]

  • Posted in Fed
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Inflation! Deflation! Two words that strike fear into the hearts of investors. Are such fears justified? Let’s take a look… If we segment calendar year changes in the Consumer Price Index (CPI) into quintiles, we observe the following: The lowest equity returns have occurred in deflationary (quintile 1) and inflationary (quintile 5) environments. The highest […]

Every major developed country central bank in the world is maintaining negative real interest rates in what is now the 9th year of a global economic expansion. Source Data: Investing.com and Pension Partners, as of February 1, 2018. Real interest rates = nominal interest rates minus the inflation rate (CPI = consumer price index). Why […]

  • Posted in Commodities, Fed, Inflation
  • Comments Off on Crude Oil, Inflation Expectations, and the End of Easy Money